Janet Daley was born in America where she began her political life on the Left as an undergraduate at Berkeley. She moved to Britain (and to the Right) in 1965 where she spent nearly twenty years in academic life before becoming a political commentator: all factors that inform her writing on British and American policy and politicians.

The BBC has no idea how to compete in a marketplace

Paul Gambaccini has made some very astute criticisms of the BBC: that it pays "preposterous" salaries to executives – and he, might have added, to some performers – and that it is obsessed with attracting younger audiences at the expense of "highbrow" ones. But sound as his conclusions may be, his analysis of the BBC's mistakes is basically wrong. He assumes that the reason for all the Corporation's absurdly bad decisions is that it has been infected with commercial values, when in fact its misjudgements reveal that it has no understanding at all of the logic of commercial markets.

First lesson of life in a highly competitive market place: do not pay a penny more than is strictly necessary to get the people you want. If a rival organisation is paying a salary of "x" to an executive, or an annual fee of "y" to a star broadcaster, you begin your negotiations at "x" or "y" plus 10 per cent, and increase it by increments until a deal is done. You do not offer 2"x" or 3"y" in a grandiose ploy to flatten any possible competitive bid, thereby needlessly spending vast amounts of money that might better have been used for other things but also spoiling the pitch for all those organisations that do not have your unfair advantage – that is, the ones who really do have to live by commercial values.

Second lesson: if you really want to beat broadcasting rivals in terms of audience share, you should pay some attention to what that audience actually wants (in other words, what the market is really demanding). The over-50s make up by far the largest age group watching television. They are also the largest, and fastest growing age group in the population as a whole. So why does the BBC treat them so contemptuously in its determination to attract younger viewers who have rather more (in their terms) exciting ways of spending their evenings? This is not clever competitive marketing: it is a stupid purblind insistence on ignoring the realities of market forces.

The BBC Trust has given a classic response to Selina Scott's complaint about sexism and age-ism within the Corporation. Its spokesman has said that it "takes the issue of equality very seriously and, to this end, annually monitors the BBC's progress on equality and diversity, including its compliance with the law." This sounds like the statemement of a government agency or a local authority whose only concern is that its staffing policy should tick all the Whitehall-approved boxes. It seems not to have occurred to the BBC that since its audience is older, and that at least half of it is likely to be female, there might be some commercial logic in employing older women. Thinking about the interests of the consumer to whom you are trying to appeal seems to be the last consideration in an organisation that has supposedly succumbed to "commercial values".

In truth, the BBC knows little and cares less about how to behave in a competitive environment. If it did, it would realise that the future of broadcasting lies in niche marketing – appealing to the tastes of smaller, specialised groups some of whom may well want mature, highbrow programming.